Israel
Military Industries set to fire 1000 workers and close factories

By Haim Bior
Ha'aretz
August 11, 2002

The state-owned defense contractor, Israel Military Industries,
plans to fire 800-1,000 employees from its current payroll of 3,700,
according to IMI chairman Arieh Mizrahi in a meeting with a delegation
from the Histadrut labor federation, headed by its chairman, MK
Amir Peretz.

Mizrahi and IMI CEO Udi Ganani made a presentation for Peretz on
Thursday, with the participation of senior managers. During the
presentation, Mizrahi said that IMI, as part of its streamlining
plan, would dismiss 400 employees from plants that would be closed.

In addition, 400 more employees would be laid off at factories
that would continue operations. Discussions would be held regarding
the fate of 200 additional employees who faced either pay cuts or
dismissals, Mizrahi said.

The dismissals are based on the findings of the interministerial
committee that examined the state of the company and submitted its
recommendations to the Finance and Defense ministries in November
2001. The committee recommended closing five plants and merging
portions of the remaining factories. The report projected that IMI's
cash flow deficit would increase by $30-40 million in 2002.

The committee determined that the most realistic option for rehabilitating
IMI was through privatization. The report states that in order to
help the company, management and employees must cooperate to implement
the committee's recommendations.

Last month, IMI postponed the early retirement payments to hundreds
of former employees who left the company in the 1990s due to a cash
crunch. Company management recently asked the treasury to provide
state guarantees for $30 million.

Peretz said in the meeting that the labor union opposed any lay-off
plan at IMI and suggested management enter negotiations with the
union. Peretz warned against unilateral measures such as dismissals,
an early retirement plan or privatization without a prior agreement
with the workers union.

"Management errs in convening separate employee meetings using
the divide and conquer method," he said.

Peretz expressed opposition to the privatization plan, saying the
Histadrut and company employees would act to prevent it. "IMI
is one of Israel's most glorious industries and there is no reason
to hand it over to tycoons when it can still be rehabilitated,"
he added. He called on the treasury to finance IMI's past debts
- the company's primary burden. The debts are primarily to retirees,
banks and suppliers.

IMI's spokeswoman said last night in response that in management's
meeting with Peretz no mention had been made of 800-1,000 dismissals.
"Any irresponsible figure tossed around regarding firings only
damages IMI and its employees," she said.

According to the spokeswoman, management and the employees union
are currently negotiating a new wage agreement, after the previous
agreement had not been renewed for two years. She stated that there
was an optimistic atmosphere at IMI due to the fact that the Israel
Defense Forces had decided to acquire Tabor rifles and the company
had $800 million in orders for upgrading tanks.

The spokeswoman added that in Thursday's meeting with Peretz, Mizrahi
had presented "IMI's capabilities and strategic goals."
Concerning separate meetings between management and groups of employees,
the spokeswoman said that employees were asked in the meetings to
aid the company's marketing efforts and there had been no need to
invite a labor representative to the meetings.